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Life Insurance is for Poor, Middle Class or Rich People?
- DetailsWritten by PolicyBazaar -
- Hits : 4555 -
Updated date : 19 June 2018
A life insurance policy allows you to financially secure your as well as your family's future and well-being in case anything happens to you and you are not able to provide for your dependent family members. There are many types of life insurance policies which are as follows:
- Term Plan
- Whole Life Insurance
- Money Back
- Endowment Plan
- ULIP - Unit Linked Insurance Plan
Individuals, whether rich or poor, should get life insurance to financially protect themselves and their family members. This is the reason why there are so many insurance companies that offer a wide range of insurance policies, according to the cost of the plan, so that people from various income brackets can take it up and make their lives financially better and have a secured future and funds enough to ward of any emergency situations. Here, poor, middle class, and rich refer to low income, middle income and high income groups. So, affordability of insurance plans and a financially good life, according to the cost and standard of living, is what is being considered here.
Life Insurance for Poor:
Low income individuals may need a life insurance more than higher income individuals as their income is often just sufficient for them to meet their day–to–day needs, but are not be able to save up any money for emergency situations or for their future needs. There are many affordable plans that offer low income individuals a good coverage. Proper research and comparisons can help one find a life insurance policy offering cheap yet good coverage.
- Low income individuals can get their hands on a life insurance policy that will cost them a nominal sum. Sure, the amount of benefits will not be very extensive, but putting in all of your money into a life insurance policy may leave you with too little money to spend for your daily or immediate needs. Many life insurance companies out there provide their insurance policies and plans at really low initial minimum costs that can help low income individuals buy a plan.
- The best plans that a low-income individual can buy are the ones that have flexible premium paying terms. Life insurance plans have different premium paying terms like monthly, quarterly, half–yearly as well as yearly. If you fall in the low income bracket, then you can take up a plan that will help you pay the premiums for the plan however you are comfortable. If you find it difficult to pay regular amount every month, then you should choose a plan that will allow you to pay the premiums annually. Though the premium will also increase with the increase in the interval time, but one can save ahead of time to pay the premium once a year and eliminate the hassle of paying every month. Quarterly premium payment is also a good option as the amount will be lower and you would have to pay only 4 times in a year.
- Taking up a life insurance policy that provides tax benefits under the Income Tax Act is a great option for low income groups as they can save money by getting good tax deductions on their life insurance policy.
Life Insurance for the Middle Class:
The middle class have a plethora of insurance plans to invest in. The best kind of life insurance plans for middle income individuals are those that involve the maximum amount of benefits for an affordable price. Paying a large sum of premium for a plan is something a middle class individual should not indulge in, as the exorbitant premium amounts could leave their little savings dry.
- Middle class individuals have limited savings that they need, so, taking up a plan and regularly paying the premium is the smart thing to do. Paying the premium regularly instead of a single paying premium plan will be easier for someone of the middle class as they only need to pay a small amount each time for the premiums. A single paying premium plan would drain your pockets faster than a sink whereas, a regular paying premium plan would allow the policy bearer to invest in small amounts of money from time to time.
- For a middle class individual, choosing an insurance plan should be purely on the basis of the benefits it offers. They should take up a life insurance policy that offers the maximum number of benefits for a low price. The cost of the life insurance policy should be the secondary focus while taking up a plan. The cheapest plan should not be taken up; rather, a plan that offers the maximum number of benefits for a reasonable price should be taken up by a middle class individual. For a middle class individual, a life insurance policy should be reasonable and not the cheapest available.
- A middle class individual, usually, gets an income that is used for the most part on their everyday expenses. The remainder is usually saved or invested in investment plans or gold funds that help the money appreciate. Another great avenue to invest in, is a life insurance policy as it is clearly more important than having some small savings in the near future. A life insurance policy is a better option to put your extra money into. Why you ask? Because unforeseen situations can arise any time regardless of the income bracket of an individual. Having a life insurance plan will help a middle class individual to live a stress free life without worrying about the problems that might.
Life Insurance for Rich People:
A life insurance policy is necessary even if you fall under the high-income category.
- Sure, you would have a lot of savings and you would also have a high income. But, unfortunate situations and market crashes do not announce their arrival. You might lose your high paying job in a split second due to any unforeseen circumstances. Sure, job security is may be guaranteed, but it will not apply in catastrophic events or when the company you work for is in danger, itself. Your savings would soon be depleted, even if they are in abundance because of the high standard of lifestyle that you are used to.
- Thus, a high income individual will also spend more. Mostly, a high spending will consume a large part of your income. So, taking up a life insurance plan is an important thing to do so that you can protect yourself as well as your family with a financial support.
- Usually, in households where one individual earns very well, the rest of the family members are entirely dependent on them or don’t focus on building up their incomes as they have the financial support of their family member. So, in the event of the unfortunate demise of this individual, family members might feel helpless without his/her financial support. So, a life insurance policy that provides a good amount as the death benefit to the nominees of the insured will be a good option for such instances.
- A life insurance policy for a high income individual is an extremely beneficial plan to take up as they put in a higher amount of premium that will result in a higher amount of sum assured.
- A high income person has the flexibility to choose features of the plan according to their wishes. They can even take up plans that have a single premium payment option as they can afford to pay a large amount of money at once which also helps them to eliminate the hassle of paying again and again. A high income person, usually, prefers to pay the entire cost at once instead of making small amounts of payments often.
- You can even invest in plans to build a corpus fund so that it can be used for further investments like purchasing a house, opening up a business or to build a trust fund for your children.
A life insurance policy is for people from all income groups, but the type and extent of coverage offered by the life insurance plan differs with each group and the individual’s age. If you want to take up a life insurance policy, you have to, first, figure out how much you can afford to pay for the premiums and then what your requirements are. There’s a life insurance plan for everyone!
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